Levels to watch: FTSE, DAX and Dow

FTSE hits crucial Fibonacci supportThe index has seen yet another sharp leg lower this morning, in a continuation of the weakness we have seen dominate the second half of the week.

However, looking at the four-hour chart, this recent move looks like a retracement rather than a reversal. With that in mind, it is very telling this morning’s sell-off has respected the 76.4% pullback perfectly. We could see this level taken out, yet this is an interesting area of a potential move higher.

As such, given the uptrend in play, a bullish view is back in play from the 76.4% retracement (6190) for a move back to the highs of 6323. This would be negated with an hourly close below 6149.

DAX crashes through key support​The index has seen another sharp leg lower this morning, entirely negating the rally that occurred earlier in the week. Certainly, this break below 10,037 is a very bearish sign and further downside appears likely in the short-term.

However, this pullback could also be seen as a retracement of the sharp rally in late May. With that in mind, watch out for potential support at the 76.4% retracement (9885) should we reach it. However, until we see a sign of a reversal, it is likely people will be selling into rallies.

Dow reaches crucial head and shoulders necklineThe index is certainly faring a little better than its European counterparts are. However, it has returned to the crucial 17,910 support level this morning.

This level represents a head and shoulder neckline, where a closed hourly candle below 17,910 would bring a strong chance of a sharp move lower for the index.

In which case, the next key support level would be 17,857. Should we not see a break below this level, another bounce could be likely to continue the sideways range of the week.